The reason this investor left his bitcoin position after the recent crash

Bitcoin is trading sideways after falling 20% ​​earlier in the week. The “extreme greed” sentiment in the market has given the uptrend strong confidence, but this has worked against the bulls as well.

At the time of writing, Bitcoin is trading at $ 46,621, having returned 1.2% over the past 24 hours.

Bitcoin is trading sideways after crashing on the daily chart | Source: Tradingview

A recent report from Bitcoin magazine shows that the flash crash preceded the rise in leveraged positions in derivatives. QCP Capital previously warned of potential downside risks as derivatives signaled “fear” among investors.

If the Bitcoin price breaks the $ 52,000 mark, the outlook will “worsen”. In addition, there is a “skeptical” mood in the market that Bitcoin’s rally to this level could “fail”.

In the months of May, June and July a similar situation occurred with the catalyst “buy the rumor, sell the truth”, in this case the implementation of the Bitcoin law in El Salvador. It also threatens a court that the Securities and Exchange Commission (SEC) has sent to the Coinbase exchange.

In this context, investor Alex Wice notification on having “exited” his bitcoin position believing the outlook in the market has changed with the recent crash.

Bitcoin’s rally was fueled by institutional investors’ involvement in Wice, which highlighted the pre-crash stake of Alameda Research, the investment arm of the FTX, as a bullish factor.

Can the bears regain control of Bitcoin?

With this in mind, Bitcoin follows two scenarios: “sideways” price movements in the coming days, such as in May and June, or, most likely, a decline to $ 30,000.

Analyst Ben Lilly has Find Correlation between recent price action and the downtrend in the NFT sector. As Ben Lilly pointed out, the EIP-1559 update made Ethereum vulnerable to fluctuations in on-chain activity.

Similarly, Ethereum was one of the cryptocurrencies that led the market during the bull run. Additionally, Bitcoin fundamentals and other indicators are turning bearish, suggesting a pullback.

“We saw a trade that was in the“ buy the dip ”trend. I saw some strange on-chain transactions that led me to believe that some were precalculated. “

Bitcoin could be at a tipping point, according to Ben Lilly. In the coming days, the fate of the bull run could be decided if Bitcoin price continues to slide down the “bull-and-bear divide,” as seen below.

Source: Jarvis Labs

This is where long-term owners become important. Their activity, measured by the age of the output issued (pink below), can indicate a “liquidity exit”.

Source: Jarvis Labs

With this in mind, Ben Lilly does not rule out a potential and lengthy short squeeze if this persists.

“With a quick turnaround in sentiment, the market will at times instigate overly bearish behavior. This means that price can quickly crowd out the stragglers’ shorts. As this scenario plays out, let’s see what the market structure looks like. If it’s a big squeeze, there will likely be another try for $ 53,000. “

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Mr. Teacher

According to NewsBTC

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